MLMPF Rules of Operation

Change chairman to chairperson
EPPI to foundation
FTC to industry authority

Multi-Level Marketing Protection Foundation Rules of Operation (hereinafter referred to as the rules)

Chapter1 General Provisions

Article 1
The rules are enacted in accordance with Article 26 of the Regulations for the Establishment and Administration of the Multi-level Marketing Enterprises and Participants Protection Institute (hereinafter referred to as the regulation).

Article 2
Multi-Level Marketing Protection Foundation (hereinafter referred to as the foundation) process matters of the Regulation article 3, besides the relevant laws and regulations, will be processed at the regulation of the Rules.

Article 3
The Rules refer the act as the Multi-Level Marketing Supervision Act.

Article 4
The rules refer the industry authority to the Fair Trade Commission.

Chapter2 Mediation of Civil Disputes

Article 5
In accordance of the Regulation article 27, multi-level marketing enterprise (hereinafter referred to as MLM enterprise) and multi-level marketing participant (hereinafter referred to as MLM participant) have the proof of Protection Fund and the annual fee; the civil dispute between MLM enterprise and participant shall be mediated by the foundation with written application.
The parties represented in the mediation event are referred to as the applicant and the counterparty.

Article 6
MLM enterprises and participants failing to pay protection fund contributions and annual fees as stipulated in paragraph 1 of Article 21 of the Regulations may not apply for mediation. However, those may apply to the foundation for mediation of civil disputes within the year after paying up the owed amounts.
In addition to applying to the foundation for mediation, MLM enterprises and their participants, that already filed for record at the time of the foundation’s establishment and have paid the protection fund contributions and annual fees according to Paragraph 1 of Article 21 of the Regulations, may also apply for mediation of civil disputes taking place since the effective date of the Act.
The point of civil dispute is considered as the MLM enterprises take necessary disposition towards MLM participants; the point of civil dispute is also considered when the written mediation request by MLM participants exceeds a month without conclusion.

Article 7
The mediation request application shall include the following items, signed or stamped by the applicant.
1.The party’s first and last name, residence, telephone number.
2.The party’s legal representative or agent’s first and last name, gender, date of birth, occupation, residence, and telephone number.
3.The requested dispute matter and amount.
4.Dispute causes and facts
5.The explanation of unsuccessful discussion or appeal.
6.The evidence for Mediation
7.Affiliated file name and number of pieces
8.Application date (Year、Month、Day)
9.Document of paid protection fund contributions and annual fees
10.A letter of appointment should be presented for legal agents.

Article 8
Failure to provide proof of paid protection fund contributions and annual fees, or request mediation on the same matter previously mediated, will not be processed by the foundation.

Article 9
For general dispute, the foundation shall designate personnel to look into the disputes and assign 3 mediation committee members to mediate. Significant dispute will require 1/3 or 5 mediation committee members to mediate. For special cases, mediation committee meetings may be requested to mediate.
For general dispute, the assigned mediation committee members shall elect one among themselves to preside over the mediation process. For significant dispute, the committee chairperson shall preside over the mediation process.
During the process of dispute mediation, if mediation committee member or mediation committee deems necessary, may notify for industry authority members to attend from the industry authority.
Significant dispute is defined as any of the following:
1.For the same reason of event, caused more than one hundred MLM participants to request mediation.
2.For the same reason of event, the requested dispute amount greater or equal to NTD $5 million dollars.
If mediation application is considered a significant dispute, the foundation shall continue as the provisions for significant dispute.
If many parties of mediation cases agree to combine cases, as procedures continue on to become a significant dispute, mediation committee member shall notify the chairperson for the reform to be carried out in accordance with the provisions for significant dispute.

Article 10
After receiving written requests for mediation from MLM enterprises or participants matching the requirements, the dispute shall set forth as in the preceding article; the foundation are required to hold the meeting within 15 days after receiving a written request. The meeting may be postponed for 7 days if necessary or with the consent of both parties to the dispute, with the mediation notice described the date, time and place to the other party.
Notification of mediation date of the preceding paragraph shall be served to the party 7 days before the mediation.
Party unable to attend on the day of mediation with justified reasons, shall provide change of date in writing before the day of mediation. After the change of date, the process will proceed in accordance of the former 2 provisions.
Cases under mediation shall be notified of mediation date, time and place by mediation committee member; parties shall attend or serve notice in records. Parties may submit written declaration for attendee.

Article 11
Party or legal representative shall attend mediation on specified date. Any one of the parties to the dispute fails to attend mediation meetings held by mediation committee members in 2 consecutive times, or no settlement has been concluded after 3 mediation meetings are held, the dispute is considered unsettled.
Counterparty with written declaration indicated rejected mediation on record, the dispute is considered unsettled.

Article 12
Mediation committee member may request the following if deemed necessary for mediation:
1.Request documents, forms, and objects from party and affiliated personnel.
2.Listen to the views of the parties, examination of a witness, or obtain written opinion of party and witness.

Article 13
Parties with many common interests from the same counterparty for the same reason, although mediation requested individually, the mediation committee may combine each cases for mediation.

Article 14
Parties with many common interests from the same counterparty for the same reason shall select 1 to 5 case representatives; also, provide a letter of consent indicating the following items:
1.Mediation committee shall not notify parties not selected as case representatives on the day of mediation.
2.If any selected case representatives disqualifies due to death or other reasons, other selected representatives shall continue to represent the party or continue mediation.

Article 15
Mediation cases shall be recorded as mediation meeting minutes; mediation meeting minutes shall include settled, unsettled, mediation updates, date changes, party presence, and other affiliated items.

Article 16
For settled dispute cases, mediation committee shall prepare a mediation records; mediation records shall include signature or stamp from party or legal representative and mediation committee member; also, the following items.
1.Party’s first and last name, residence; if legal representative or other organization, then name, legal representative and main office address, or business address.
2.Legal representative name and residence.
3.Selected case representative name and residence.
4.Interested party of mediation attendee’s name and residence.
5.Mediation committee member and joint mediation member’s name and residence.
6.Dispute mediation subject.
6.If the dispute is settled and the MLM enterprise is liable for damages in the settlement, the foundation shall set a date for the enterprise to pay the liable damages.
8.Place of mediation dispute settled.
9.Application date (Year、Month、Day) of mediation dispute settled.

Article 17
For unsettled dispute cases, within 7 days after the parties fill out a written application, the mediation committee shall prepare a certificate of unsettlement.
Certificate of unsettlement shall indicate reasons of unsettled mediation dispute.

Chapter3 The regulation article 30’s assists in filing lawsuit.

Article 18
In accordance of article 30 in the regulation, the foundation has concluded that the MLM enterprise is liable for damages, though the mediation has failed, the MLM participants may submit a written request with certificate of unsettlement to the foundation for lawsuit filing assistant.
Lawsuit filing assistant alleged parties are applicant and counterparty.
Lawsuit filing assistant alleged advance expenses indicates the foundation shall advance the litigation expenses and attorney’s fees.
The attorney’s fees mentioned in the preceding article shall not exceed the amounts set forth in Article 4 of the Standards for Payments of Fees for Court-appointed Attorneys and Third-instance Attorneys.

Article 19
Lawsuit filing assistant application shall include signature or stamp by applicant; also, the following:
1.The party’s first and last name, residence, telephone number.
2.The party’s legal representative or agent’s first and last name, gender, date of birth, occupation, residence, telephone number.
3.Request advance amount of lawsuit filing assistant.
4.Request same cause of event.
5.In cases where the same cause has harmed the interests of more than 20 participants or requested damages amounted to more than 1 million.
6.Reasons for the MLM enterprise to be liable for the damages
7.Affidavit of repaying advances of the litigation expenses and attorney’s fees at the end of the lawsuit.
8.Affiliated file name and number of pieces.
9.Application date (Year、Month、Day)

Article 20
Following a review of the application proceedings to lawsuit filing assistant, board of directors at the next board meeting shall make the decision of whether to grant the lawsuit filing assistant. If vote passed, the foundation shall immediately prepare the advance.
The advance of the litigation expenses and attorney’s fees shall be within a certain amount determined by the board of directors.
Advances are as supplemental, if applicant is in accordance of other legal provisions to request lawsuit aid, the foundation advances shall support the shortcomings of the lawsuit assistant.
After applicants disregard the notification by the foundation regarding lawsuit aid, the foundation shall not accept the application request for lawsuit assistant.
Applicant shall request assistant from the foundation in each stage of the process in lawsuit, the total advance amount be within a certain amount determined by the board of director.

Article 21
Applicants who have difficulty on the selection of lawyers; the foundation shall provide a list of recommended lawyers.

Article 22
Applicants shall keep the foundation updated with progress of the lawsuit; the foundation shall also request timely updates from the applicant, the applicant shall not refuse.

Article 23
After the end of the proceeding lawsuit, the foundation shall request advance expense from applicant within 30 days of notice, advance payback payment methods shall be determined by the board of directors.
The preceding advance payback payments shall not include interest. Payback payments exceed 30 days of notice shall include statutory interest.

Chapter4 MLM enterprise’s liability of damage compensation: compensatory and recovery.

Section 1 Compensatory
Article 24
In accordance of the regulation article 29, the foundation shall order the enterprise to pay the liable damages within 30 days. With a written request, the foundation shall advance the payment if the enterprise fails to pay within the given period.
The parties represented in compensatory cases are referred to as the applicant and the counterparty.

Article 25
Application for compensatory shall include signature or stamp by applicant; also, the following:
1.The party’s first and last name, residence, telephone number.
2.The party’s legal representative or agent’s first and last name, gender, date of birth, occupation, residence, telephone number.
3.Request advance amount of compensatory.
4.Notice of assignment of debt.
5.Affiliated file name and number of pieces
6.Application date (Year、Month、Day).

Article 26
After the foundation advance the compensatory to MLM participants, within the amount of compensatory, inherit the right the MLM participants bear on the MLM enterprise.

Article 27
Following a review of the application proceedings to Compensatory advance, board of directors at the next board meeting shall make the decision of whether to grant the lawsuit filing assistant. If vote passed, the foundation shall prepare the certain amount of compensatory advance within 7 days.
The compensatory amount shall be within a certain amount determined by the board of directors.

Section 2 Recovery compensation

Article 28
In accordance of the regulation article 29, within a certain amount of the damages, the foundation shall advance the payment and then seek recovery from the enterprise if the enterprise fails to pay within the given period.

Article 29
Recovery compensation shall pursuit in litigation, enforced, or other actions that does not violate the laws.
Recovery compensation shall entrust in an accredited lawyers.
Entrusted of recovery compensation, unless otherwise stated, shall not include privileges such as reconciliation, give up, promise, or withdraw.

Article 30
Person entrusted of recovery compensation shall not proceed with methods violating the law; also, shall not be detrimental to the foundation.
If person entrusted of recovery compensation breaches the contract, involves in misconduct or violate the rules of relevant regulation; the foundation shall terminate the entrusted relationship, and further claim damages reparation.

Article 31
Person entrusted of recovery compensation, arrangement of recovery, and affiliated information shall remain confidential; except for the request of the law, the court, and the industry authorities.

Chapter5 Management and usage of protection fund, annual fee, and other yields.

Article 32
In accordance of the regulation article 21’s protection fund and annual fee, the foundation shall establish account in industry authority designated financial institute.
MLM enterprises and MLM participants shall make payment of protection fund and annual fee through bank counter, money order, network transfer, or other consents of board of directors.
MLM enterprises shall indicate company name and unified business number; MLM participants shall indicate MLM participant’s name, company name, identification card number, unified business number, or participant’s MLM business code.

Article 33
MLM enterprises that did not pay or did not pay according to the regulation shall be notified by the foundation through registered letter at the end of each quarter; the foundation shall report to the industry authority regarding MLM enterprises that did not pay on the 15th of the month after each quarter.
The foundation shall produce and update the list of payment of protection fund and annual fee to the industry authority at the end of the month after each quarter.

Article 34
The foundation shall organize board of director meetings periodically to utilize and manage the protection fund, annual fee, and other yields effectively.

Article 35
The management of the foundation’s protection fund, annual fee, and other yields shall be the purchase of government bonds or deposited in financial institute.
The utilization of the foundation’s protection fund, annual fee, and other yields shall only be used for foundation’s operation and purchase of foundation real estate; shall not be used for other items.
The foundation’s administrative cost (including personnel and rent), operational cost shall not exceed annual fee’s 50%.
The costs of the preceding paragraph shall no include lawsuit filing assistant and recovery compensation.

Article 36
Conducting the regulation’s lawsuit filing assistant, recovery compensation, MLM participants shall include the following documents for the preparation of the foundation:
1.Identification documents or juristic person registration document.
2.Proof of paid protection fund contributions and annual fees.
3.Application form.
4.Photocopy of bank book cover in financial institutions of securities.
5.Other rights affiliated documents.

Article 37
Applicant who is limited in capacity to make juridical acts, subject to guardianship or subject to assistantship, must be approved by his guardian or assistant to apply for fund preparation. Application shall be enclosed with legal representative, guardian, or assistant’s photocopy of national identity card, and application shall indicate relationship with applicant.
If applicant have not received national identity card, it could be replaced by household registration; legal representative, guardian, or assistant shall have proof documentation of custody or auxiliary right.

Article 38
The foundation shall notify applicant for document corrections; application overdue or application that failed to correct preceding two rules of relevant documents or correct inconsistent documents shall not be accepted by the foundation.

Article 39
The foundation shall seek the situation of protection fund, adjust protection fund’s lawsuit filing assistant periodically, total recovery compensation ceiling; also, declare to industry authority for approval.

Chapter6 Promote professional knowledge of law and regulation

Article 41
The foundation shall conduct relevant research project, academic seminar, issues and articles, government regulation announcements, information exchanges and other affiliated activities to promote MLM regulation and professional knowledge.

Chapter7 Assist in education and training activities.

Article 41
The foundation shall accept education and training courses from government agencies and MLM enterprises.

Article 42
The foundation shall organize MLM education and training activities taught by lawyers; Generate a list of lawyers that spoke certain hours at the training for lawsuit filing assistant in article 22.

Chapter8 Provide law consulting services

Article 43
The foundation shall set up consulting services for MLM related laws.

Article 44
The foundation’s law consulting services are appointment bases; shall increase telephone consulting as needed. The foundation shall keep “law consulting service records”; records include consulting seeking person’s first and last name、case subject、mediation conclusion、and other affiliated documents.

Chapter9 Supplementary

Article 45
The rules have been passed by board of directors, enacted after the declaration to industry authority for approval; modification shall follow the same procedure.